Legislatures’ Expansion of Historic Credits In Connecticut and Massachusetts Bodes Well for Preservation in Region
By Caitlin Jones & A. J. Johnson
3 min read
Tax Credit Advisor July, 2006: In two important recent victories for preservationists and developers, the legislatures of Connecticut and Massachusetts have significantly broadened their states’ historic tax credit.
In Connecticut, the General Assembly passed and Gov. Jodi Rell signed into law a bill that that authorizes $15 million in state tax credits annually for the rehabilitation of qualified historic commercial or industrial properties. The bill permits owners to receive a tax credit for 25 percent of rehabilitation expenditures, up to $2.7 million per project.
Previously, the state limited its historic credit to owner-occupied, one- to four-unit buildings.
Meanwhile, in Massachusetts, the state legislature passed a bill that would more than triples funding for the state’s two-year-old historic tax credit program, from $15 million to $50 million a year through 2010. The 20 percent credit applies to income-producing property. Although Gov. Mitt Romney hasn’t yet signed the bill, preservationists say support is so strong for the measure, that state lawmakers are poised to override a veto, should one occur.
“These are both great coups for preservation,” said Jim Igoe, president of Preservation Massachusetts, which proposed the legislation in Massachusetts.
Connecticut Bill Promises Wave of New Development
The action in Connecticut creates what is essentially a new state historic credit, according to Helen Higgins, executive director of the Connecticut Trust for Historic Preservation, a nonprofit developer and advocate of historic preservation.
Significantly, she said, the expanded historic tax credit program will allow mill projects to undergo adaptive reuse, an important use of historic tax credits in other New England states.
“This is going to be a sea change,” she said. “It’s the state’s first major commitment to the adaptive reuse of commercial buildings, and I think it will attract a lot of developers.”
Higgins attributed the victory to new leadership in the state House and Senate that is interested in “quality of life issues.”
Expanded Tax Credit in Massachusetts Could Bring in More Developers
If the legislation broadening Massachusetts’ historic tax credit becomes law, it could make a huge difference in developers’ interest in these projects, said Igoe. He noted that because the legislation makes funding of the expanded tax credit retroactive to 2005, a total of $300 million in new funding would be available between now and 2010.
Igoe said that the Massachusetts Historical Commission is currently considering 28 projects requesting a total of about $80 million in tax credits.
“There is a big demand for these credits, and the legislation would help meet the demand,” Igoe said. He noted an expansion of funding would be particularly helpful in making possible projects that combine low income housing tax credits and historic tax credits to provide more affordable housing.
When Massachusetts lawmakers created the state historic credit in 2003, they set the cap at $10 million a year. A year later it was expanded to $15 million. Igoe noted the legislature’s further expansion of the cap this year followed protracted discussions between the House and Senate.
The bill now awaits the signature of Gov. Mitt Romney. Romney, a Republican, has expressed reservations about its budgetary impact. A spokesman for the governor said Romney hasn’t yet decided whether to veto the bill, but will decide shortly. Igoe said Democrats have the votes to override any veto by Romney.
